IMF Executive Board Approves US$3.47 billion for Morocco Under the Precautionary and Liquidity Line

IMF News, July 22, 2016

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Canonical URL: IMF Executive Board Approves US$3.47 billion for Morocco Under the Precautionary and Liquidity Line

Approval date: July 22, 2016
Instrument: Precautionary and Liquidity Line (PLL)
Duration: two-year arrangement
Total approved: SDR 2.504 billion (about US$3.47 billion, or 280 percent of Morocco’s quota)
Access in the first year: SDR 1.252 billion (about US$1.73 billion, or 140 percent of quota)
Moroccan authorities have stated that they intend to treat the arrangement as precautionary and do not intend to draw under the PLL unless Morocco experiences actual balance of payments needs from a significant deterioration of external conditions.
Media relations contact listed: PRESS OFFICER: Wafa A. Amr; Phone: +1 202 623-7100; Email: MEDIA@IMF.org

Morocco’s first PLL arrangement: SDR 4,117.4 million (about US$6.21 billion at the time of approval) — approved on August 3, 2012 (Press Release No. 12/287).
Morocco’s second 24-month PLL arrangement: SDR 3.2351 billion (about US$5 billion at the time of approval) — approved on July 28, 2014 (Press Release No. 14/368).
Purpose of PLL (introduced in 2011): to meet more flexibly the liquidity needs of member countries with sound economic fundamentals and strong records of policy implementation but with some remaining vulnerabilities.

Recent achievements:
- "Morocco has made significant strides in reducing fiscal and external vulnerabilities and addressing medium-term challenges, supported by the two successive Precautionary and Liquidity Line (PLL) arrangements."
- "External imbalances have declined substantially and fiscal consolidation has progressed, while policy and institutional frameworks have been strengthened, including through the implementation of the new Organic Budget Law, the adoption of the civil service pension reform, and ongoing improvements to financial sector oversight."
Downside risks highlighted:
- "Heightened geopolitical and security risks"
- "A protracted period of slower growth in Morocco’s main trading partners"
- "More volatile global financial conditions"
- Potential transmission channels of these risks: higher oil prices, disruptions to export and tourism revenues and remittance and capital inflows, or higher borrowing costs.
Role of the successor PLL: "A successor PLL arrangement would serve as a valuable insurance against external risks and support the authorities’ economic policies."

Fiscal policy:
- Further fiscal consolidation should be based on both continued expenditure control and further tax reforms.
- Timely implementation of the civil service pension reform and careful fiscal decentralization to help preserve fiscal sustainability.
Financial sector and monetary policy:
- Adopting the revised central bank law and continuing to implement FSAP recommendations to further strengthen the financial sector policy framework.
- Push forward with the plan to transition to an inflation-targeting regime and greater exchange flexibility to help preserve competitiveness and enhance the economy’s capacity to absorb shocks.
Structural reforms:
- Continue reforms to improve the business climate, competitiveness, and labor market policies to increase potential growth.
- Address persistently high unemployment levels, especially among the youth, and increase the participation of women in the labor force.

وسيكون الاتفاق الجديد مفيدا للمغرب في اتقاء الصدمات الخارجية بينما تواصل السلطات تنفيذ جدول أعمال الإصلاح لتعزيز صلابة الاقتصاد وتحقيق نمو اقتصادي أعلى وأكثر احتواء لمختلف شرائح السكان

IMF Press Release No. 16/355, July 22, 2016.